The new Trump administration is looking to eliminate the federal tax credit for new electric vehicles, which could negatively impact Tesla's sales, especially in California.
State Rebate Plans
California's Governor Newsom has announced that the state will bring back its rebate incentive for new EV purchases that was removed last year. This move is intended to help automakers cope with the potential loss of the federal tax credit.
The Inflation Reduction Act, which oversees the federal EV tax credits, was initially designed to last until 2032. However, the incoming administration seems to have different budget priorities, focusing more on new technologies like carbon capture rather than the established EV market.
Price Increase for Tesla Buyers
For those looking to buy Tesla vehicles in California, particularly the much-anticipated Model Y Juniper facelift, they may face a price increase of $7,500 compared to the existing Model Y. This is not due to Tesla raising prices for its Juniper refresh, but rather the impact of the changing incentives.
Governor Newsom mentioned that the state rebate will be allocated based on market share to foster competition among electric vehicle manufacturers. "It's about creating the market conditions for more of these car makers to take root," he said.
Impact on Tesla's Market Share
This strategy will effectively leave Tesla out of the state funds meant to offset the loss of the federal tax credit, as Tesla holds the largest market share in the state.
Even though Tesla's EV market share in California has declined from last year, the company still accounts for more than half of all electric vehicle sales in the state. Therefore, the sudden removal of all tax incentives could hinder its growth opportunities.
Elon Musk has pointed out that Tesla is the only company producing electric vehicles in California, suggesting that excluding it from future state rebates would not make much sense.
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